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Grooming Starts at 35

General Electric, founded in 1878, boasts gross operating revenue of US$150 billion, a 300,000-strong workforce and the world's fifth most valuable brand name. It's currently ranked 13th in a Fortune magazine survey of the world's most respected businesses.

GE is seen as employing the most successful program for grooming its next generation of corporate leadership. Former CEO Jack Welch is also considered to be one of the most successful corporate managers of the 20th century. GE has traditionally sourced its next generation of corporate leaders from within the organization. In pursuit of sustained growth, GE has invested tirelessly in human resources training, with annual training program budgets reaching US$1 billion.

Jack Welch believed that successful leadership candidates all possess the following four qualities: energy, energize, edge and execution.

Throughout GE's leadership grooming process, the emphasis is on "learning by doing," assigning trainees highly difficult tasks to perform during rotations through various corporate departments, and observing their performance in coming to the company's rescue under duress. The company's board of directors observes the performance of each candidate while providing honest, meaningful feedback.

While there are no precisely defined financial objectives, the key question is always whether or not something could have been done better. GE's philosophy has been to push the envelope to the extreme.

From their first interview, prospective employees are considered for placement in the company's leadership training program. Two years of hands-on training on overseas rotations can prove more valuable than earning a doctorate. The leadership training program goes back a hundred years and currently involves around 3,000 active GE employees.

In 1956, GE established what is now known as the John F. Welch Leadership Center in Crotonville, New York, the world's first corporate university. Half of the CEOs of the world's top 500 corporations have received training through the center.

To reorient the course content and learning environment at its Crotonville center and determine whether adjustments were necessary, GE put together a team of 21 experts who spent three months pondering what would be necessary in the future for training the next generation of corporate leaders.

GE believes a company must rethink its leadership priorities during different phases of its corporate development. Consequently, in 2009, GE brought together a group of academics and opinion leaders from both inside and outside the company who spent 18 months debating and analyzing the type of leaders they should be grooming.

I believe a company must resolutely embrace and devote the necessary time to grooming its next generation of leaders, to implement a workable system of succession.

GE corporate rules dictate retirement at age 65, and Welch believes that given the 10-year grooming period, a new leader's course should be set by age 35. That means new employees fresh out of grad school must explicitly show whether they have the stuff it takes to be one of the next generation of leaders, getting underway with training by 30 and accelerating their pace of development. Another primary factor in leadership selection is whether or not a candidate is capable of making tough decisions. That not only requires professional capability, but also depends further on moral character and personal integrity. Showing those sorts of personal qualities at a crucial moment is even more important.

(The above paragraphs are highlights of remarks delivered by Jason Hsu, CEO of GE Taiwan, at the CommonWealth Economic Forum, Feb. 2012.)